If you were to ask anyone throughout history about the best way to create wealth, they would invariably say through holding land. While some people might point to studies showing investing in a mix of equities and bonds comes out slightly ahead of real estate investing, all you have to do is look at recent immigrants to see why investing in land is far superior.
Most new immigrants who arrive in the west almost always immediately snap up any property they can afford. Why? They know investing in land – through any means necessary – is the one true route to generational wealth. Many of them come from countries that saw stock markets and savings wiped out almost overnight, and they understand that productive land is always valuable.
But if you want to start a real estate empire – not just buy a condo and rent it out for a few years – you’re going to have to look at owning land differently. And more importantly, you need to ignore the prevailing trend of investing in a house and hoping for appreciation.
Start with Multi-Family or Multi-Tenant Buildings
The hard truth of the matter is that with current real estate prices, it’s incredibly difficult to build an empire using single detached dwellings or condo apartments.
In most areas – excluding some declining or stagnant cities – houses and condos simply don’t cash flow any longer. If you want to focus on growing your real estate portfolio, you not only need your properties to cover all your expenses (mortgage, property taxes, insurance, etc.) but you also want to earn a significant amount of free cash flow every month.
And cash flow is all that matters when building a real estate empire.
For example, shortly after I first started investing in property, I purchased an old rundown farmhouse that had been half-heartedly converted into a 5-plex. The building had been painted a beautiful puce green, the floors were uneven, and the roof was sagging. But when it was fully rented it cleared over 1500 dollars a month after expenses.
I could deal with a lot for that much money.
And that’s the sort of property you need if you want to build a real estate empire. I’ve since expanded to vacation properties, duplexes, triplexes, and I’m working on buying an apartment building. The key is that each property must provide significant positive cash flow. This gives me more money every month to fund new deals or to upgrade existing properties.
Hack Your Land
Too many people buy a property and simply settle for renting it out. That’s no way to build a real estate empire. Sometimes you can double or even triple your monthly income by hacking your land. Many of you have most likely heard of hacking your house – renting out individual rooms to cover the mortgage – but most of you have probably never thought of applying it to your land.
When I rent out a dwelling on a property, it’s only the start of making money there. Going back to my farmhouse example, it was located on an acre of land and had plenty of unused space. First, I placed large sheds on the property and then rented them out as storage. Then I approached some of the locals until I found someone who needed an area to raise chickens. And finally, I placed a tiny home on the rear of the property and started to rent it out as well.
During this time, I was also approached by a bee-keeper to use the rear of the lot, but visions of my tenants being swarmed and stung by bees made me decline the offer – though I admit I did consider it briefly. Did I mention how much I like money?
All these things added nearly 1000 dollars a month to the property’s income, with virtually no extra work from me. If you want to grow a real estate empire, ‘hacking your land’ helps you grow much more quickly.
Don’t Be Afraid to Think Outside of the Box
Back in my early days of real estate investing, I was unemployed, disabled, with only a little bit of cash to my name. While some of that money went towards establishing my blogging empire (I’m a big fan of empires), I had to get creative to get started in real estate, as no mortgage broker or bank would touch me with a ten-foot pole.
For my first purchase, I bought an undeveloped lot for cash. The property was outside of a small town and had impressive scenery and frontage along a beautiful river. Knowing I couldn’t afford much, I searched for the cheapest houses I could find to place on the land.
Needless to say, I was shocked that many mobile homes were selling for well over 100k at the time. And prefab homes weren’t much better. I couldn’t hope to afford either of those options.
But undeterred, I turned my attention to tiny homes. After a bit of searching and haggling, I managed to buy a used one for only fifteen thousand dollars. I placed it on the land, put up an ad for vacation rentals, and started earning an average of 100 dollars a night. After only a year and a half, the property had paid itself off and is now earning pure profit.
The point of this story is that sometimes you need to think outside of the box. My humble beginnings made me look at non-traditional real estate assets and ways to make money. And it was because of these that I was able to grow my real estate empire so quickly.
There are hundreds of different ways to make money with real estate – not just buying and holding houses and condos. And non-traditional properties (farmland, vacation homes, and camping sites) can help you grow your real estate empire quickly.
While there is nothing wrong with traditional real estate investing, it often takes years – or even decades – to build an empire. The margins are just too slim. But if you focus on increasing your cash flow, hacking your land, and looking at some non-traditional properties, you can grow your real estate portfolio every year. And that’s how you build a real estate empire.
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